KentuckyHB 6772026 Regular SessionHouse

AN ACT relating to energy production and byproduct management.

Sponsored By: Jim Gooch Jr. (Republican)

Became Law

CoalEnergyEnvironment And ConservationFuelMinerals And MiningOil And Natural GasPollutionReports Mandated

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 1 benefits, 0 costs, 7 mixed.

State-run CO2 storage permits

The Energy and Environment Cabinet runs Kentucky’s permit program for underground CO2 storage. Injection is allowed only with a permit. Permits require site studies, safe drilling materials, monitoring during and after injection, and money set aside to plug wells and handle emergencies. The Cabinet must notify mineral, pore‑space, and adjoining owners and may hold a public hearing. The program meets U.S. EPA standards and can coordinate with other states. CO2 injections for enhanced oil or gas recovery under a cabinet permit (KRS 353.592) are outside these new sections. The law repeals the old CO2 storage statutes and replaces them with this framework.

CO2 storage enforcement and rights

Starting an appeal does not pause cabinet notices or orders. A hearing officer decides any request for temporary relief within days and only if the requester is likely to win and no health or environmental harm will occur. If the cabinet does not sue within 10 days after a written request, an affected person can sue to stop a violation. People who falsify applications, fail to fix violations, or have forfeited bonds cannot get or transfer permits. Mineral and pore‑space owners keep the right to develop oil, gas, or other minerals above or below a reservoir, but any well through the reservoir must protect it and prevent CO2 release.

Setbacks and local say on energy projects

The law sets minimum distances: stacks and wind turbines must be 1,000 feet from adjoining property lines, and energy structures must be 2,000 feet from neighborhoods, schools, hospitals, and nursing homes. Coal and gas stacks follow these distances; solar and wind structures do too, and wind hubs are capped at 350 feet unless an allowed exception applies. The Public Service Commission can approve closer siting only if the project still meets listed environmental and service goals. Local planning and zoning rules take priority where they exist, and local ordinances generally win over conflicting state siting orders. Special rules require advance notices and public meetings, including mailed notice to adjoining owners and a local pipeline meeting if at least three residents ask. The board must decide complete applications within 120 days, or 180 days if a hearing is requested.

Bonds and cleanup rules for power projects

Applicants for merchant power projects must file a decommissioning plan and buy a bond equal to the higher of the engineer’s net‑present‑value cleanup cost or the local bond amount. The plan covers removing above‑ground and underground parts (unless the current landowner asks otherwise) and restoring soil and land, and must be in leases. File a bond copy by construction start and update it at least every five years; remove discarded solar or wind parts within 90 days unless extended. A construction certificate is valid for three years after the last Cabinet permit; the board may charge application and supplemental fees. After power sales start, sellers must file transfer notices in 10 days; buyers must assume duties and adopt or replace the bond in 10 days; sellers remain liable until filings are accepted; the Cabinet reviews plans and bonds at least every five years and can raise amounts.

New rules for CO2 storage projects

The law requires a Class VI permit and a state drilling permit for each well before you build or run a CO2 storage site. Applications must use Cabinet forms, show 75% pore-space consent, request pooling for up to 25%, and prove legal rights to 100% and surface access; review pauses for real ownership disputes. You must publish a 30‑day public notice, pay application fees, and the Cabinet decides completeness in 60 days and a final decision within 365 days. A permit issues only if the project is safe, mineral owners are protected or agree in writing, nonconsenting owners are fairly paid, and you post and maintain financial assurance; bonds, insurance, letters of credit, trust funds, or self‑insurance are allowed and can be increased after review. Transfers need Cabinet approval and a fee; permits are reviewed at least every five years; permits and surveys are filed with county clerks; compliant injected CO2 is not a pollutant or nuisance, but operators own it and are liable until completion is certified. Converted oil and gas wells must meet these same sequestration rules.

Stronger bonds and post-build oversight

Projects must carry strong decommissioning bonds from highly rated sureties, with 30‑day cancellation notice to owners and the Cabinet and a chance to cure. Landowners (or the Cabinet with their approval) can draw on the bond and complete the plan; the applicant pays cure costs. The party doing decommissioning keeps salvage proceeds; any Cabinet recovery above total decommissioning costs goes to a state monitoring and enforcement fund. Buyers need board approval to take over a certificate, showing a good compliance record and capacity; any condition that forces board approval for transfers after construction is void, but legal notices and filings still apply. After construction and power sales begin, the Cabinet secretary—not the board—enforces ongoing conditions and mitigation. Replacing a like facility or making repairs or upgrades does not count as construction under the named statutes.

Operators must coordinate on shared wells

Oil and gas operators must send well applications to the sequestration operator, and the Cabinet will notify both. Non‑applicant operators have 15 days to object; the Cabinet holds a hearing within 10 days and may modify permits. In cost disputes over well work, the Cabinet decides who pays extra and when. To plug certain wells, you must notify the other operator and the Cabinet and plug only with Cabinet approval and a representative present.

Permits for transmission lines and CO2 pipelines

You must get a Public Service Commission construction certificate before building a nonregulated transmission line or a CO2 pipeline. File an application, pay the fee, and cover any consultant costs the board hires. Include maps, right‑of‑way limits, and distances: one mile for lines and 1,000 feet for pipelines. For lines, the board decides in 120 days, or 180 days with a local hearing, and may require route changes; the board sets fee amounts by regulation.

Sponsors & Cosponsors

Sponsor

Jim Gooch Jr.
Republican • House

Cosponsors

J.T. Payne
Republican • House
Wade Williams
Republican • House

Roll Call Votes

All Roll Calls

Yes: 197 • No: 28

House vote • 4/1/2026

passed

Yes: 61 • No: 28

Senate vote • 3/31/2026

3rd reading, passed

Yes: 38 • No: 0

House vote • 3/9/2026